[Editor's Note: The following post is by TDV Editor-in-Chief, Jeff Berwick]
Nations all over the world appear befuddled about bitcoin, and with good reason.
Bitcoin doesn't offer itself to taxation and regulation like government authorities need in order to maintain their dominance. Instead, bitcoin offers itself to creativity and innovation, two things that make governments nervous when they come from the grassroots.
Very little has come out about the regulatory nature of digital currencies. What has come out is confusing from a practical standpoint, and porous from a legal perspective. I suspect that those rulings which have come out will likely be changed as nations realize without bitcoin they are at a competitive disadvantage in one of the most important economic and technological innovations in history.
This is what is taking place in Britain, at least.
Britain's HM Revenue and Customs has advised traders that it is looking into alternatives to the 20% value added tax on bitcoin purchases. That means currently that traders have to essentially pay nearly $200 everytime they sell a bitcoin. That is absurd, and makes any british bitcoin trader at a total disadvantage compared to their US counterparts.
In Britain, bitcoin is considered a voucher and not a currency, and so is subject to the dreaded VAT.
The change in tone from HM Revenue and Customs comes on the heels of traders complaining that VAT made their businesses uncompetitive globally. They were in many cases looking not to get out of bitcoin, but to move to more favorable jurisdictions. Whatever Britain's HM Revenue and Customs decides, it would probably be a good idea nonetheless for these traders to offshore their assets and reap the benefits of more just tax rates and less invasive bureaucracies.
Tax authorities around the world are seeking to get their "fair share" for the "greater good" from the bitcoin economy, while simultaneously lessening the risk of tax avoidance and evasion. But, this has been easier said than done.
The US Internal Revenue Service was criticised this month by an internal watchdog which stated "the lack of clear answers to basic questions” on digital currencies was abetting tax evasion and avoidance.
Singapore's bitcoin guidelines calls for levies on profits from bitcoin trading.
In the UK, the Revenue is looking to reclassify bitcoin as private money, which happened already in Germany. That would decrease the VAT on transactions to only the commission charged by trading exchanges.
Many britons expected the Revenue to look towards Finland for example.
In Finland, it was ruled that bitcoin does not fit the definition of a currency or even an electronic payment form. Instead, the software responsible for bitcoin is a commodity, like gold.
All over the world regulators are on different pages regarding what to classify bitcoin. They are, however, on the same page when it comes to wanting to tax and regulate it.
China's central bank banned lenders from handling bitcoin, while the US IRS merely said it is working on the issue of bitcoin and that it has been "monitoring" digital currencies and transactions since 2007.
Bitcoin: Good As Gold?
In our report, Get Your Gold Out Of Dodge, we detailed the ways and means for you to get your gold out of the US, Canada and Europe. (another highly regulated trade) We're finding that bitcoin solves many of the problems experienced by our clientele when it came to exporting/importing gold and silver.
In the last ten years, and especially in the last five, gold caught the attention of mainstream media and investors as the ultimate safehaven.
In the last year, though, another option has gained overwhelming publicity. That option, bitcoin, has been the subject of diverse editorials from the world's top financial newspapers, as well as academic research papers from renowned Universities.
Quite simply, bitcoin is a technological breakthrough. It is modern, convenient and demonstrates most of the characteristics of money.
One of bitcoin's biggest benefits as an option for internationalizing one's assets is that it exists only as an abstract computer-driven file. This makes the coin exceedingly durable and easy to transport (or recover) anywhere in the world.
In other words, you don't have to bury a few bitcoins in the backyard, and then dig them up on the offchance you need them, like with gold and silver. Bitcoins are much less bulky than precious metals, a major convenience. Plus, nobody wants to board plane-after-plane to get a considerable amount of gold out of the US. Looking to ship the precious metals? Well, you will want insurance, likely. And without a doubt you will have to trust a third-party with your assets. (USPS, FedEx, UPS, if they'll even ship the metals where you want them to go)
That bitcoin is not tangible bestows upon it special properties. Special properties that neither gold nor silver demonstrate. There doesn't need to be a middleman when transporting bitcoins across the world. Being intangible, also, means bitcoins can be used in our modern digital economy in many more ways than gold and silver.
Gold and silver are money – great forms of money, at that. But bitcoin is simply an amazing money. Even Milton Friedman foresaw the day when bitcoin would lessen the role played by governments. As Friedman states in the following video, "The things that's missing but will soon be developed is a reliable e-cash. A method whereby on the internet you can transfer funds…"
After all, it turns out, bitcoin was long overdue. The internet is one of the most disruptive technologies of all time, moreso than the Gutenberg press. Instead of merely enabling the people to read books, as did the Gutenberg press, the internet has allowed the people to write books and get their thoughts heard.
What makes bitcoin so powerful? It makes the internet, an already paradigm shifting technology for mankind, easier to use than it already was. Moreover, it revolutionizes practices that have been around for thousands of years; namely, exchange. That's why bitcoin as a technology (and other crypto-currencies) is the future of asset internationalization.
TDV Wealth Management Crisis Conference
The world is changing quickly. But no aspect of our world is changing as quickly as the bitcoin space. It seems daily some new, huge story breaks out with implications for the bitcoin economy.
We have been receiving a lot of phone calls lately from individuals interested in taking advantage of the TDV Wealth Management Crisis Conference.
We have setup a fantastic conference, with the dedicated help of TDV Wealth Management, whereby attendees will be given the tools they need now to begin internationalizing their personal assets ahead of FATCA and other grave economic events.
In the midst of organizing the conference, many of our clients asked if there would be anything about bitcoin at the conference, as they felt that was one of the most viable ways in which individuals could diversify their assets away from North America and Europe. And we agree.
That's why we have added some well-known bitcoin analysts, who have prepared intriguing and convincing presentations and seminars on bitcoin for the Crisis Conference. It simply makes sense. As our readers know, the cost of the conference covers an entire family. We felt this made sense since our solution to asset internationalization is multi-generational. We hope the advent of bitcoin might make the event more entertaining for some of the attendees representing the millenial generation.
At the conference, not only will you hear from the world's foresmost experts on asset internationazation, second passports and citizenship, as well as expatriation, but you will also hear from bitcoin experts who will go over how this nascent, decentralized digital currency can help secure a diverse and international portfolio.
The Crisis Conference is one of the most exciting initiatives we've taken at the Dollar Vigilante to help protect people from money-grabbing governments. And, with the addition of bitcoin, it has become even more exciting and cutting-edge.
